Document template

Gift letter template for a home loan

When family contributes to your deposit, lenders need it in writing that the money is a gift and not a loan. The letter itself is short. What matters is that it says the right things, is signed by the people actually giving the money, and arrives alongside a clean bank trail.

Statutory-style gift letter

[Date]

To whom it may concern

Re: Gift to [Full name of recipient] for the purchase of property

We, [Full name(s) of person(s) giving the gift], of [Residential address], confirm the following:

1. We are gifting the sum of AUD $[Amount] to [Full name of recipient], who is our [relationship, for example: daughter / son].

2. The funds are being provided to assist with the purchase of a residential property, and may be applied toward the deposit, purchase costs or associated expenses.

3. The gift is unconditional and non-repayable. We do not expect repayment of any part of it, now or in the future.

4. We will not hold any interest, charge, security or claim over the property being purchased, and we will not be residing at the property.

5. The funds are ours to give, and come from [source of funds, for example: personal savings held with (bank) / proceeds of sale of (asset)].

6. We are not borrowing these funds and no third party has any interest in them.

Signed:

_______________________________          _______________________________
[Name]                                    [Name]
Date: [Date]                              Date: [Date]

Before you use this. Many lenders issue their own gift letter form and will require that form rather than this one. Use this to understand what will be asked and to prepare the information in advance. Where the amount is significant, or where family circumstances are complicated, the people giving the gift should get their own legal advice before signing anything.

What the letter has to establish

Three things, and lenders check for all of them. That the money is a gift rather than a loan, because a loan is a liability that reduces your borrowing capacity. That the giver has no claim over the property, because a lender taking security wants no competing interest. And that the funds are genuinely the giver's to give, which is why the source of funds line matters.

The evidence that travels with it

A letter alone is rarely enough. Expect to provide the transfer record showing the money moving from the giver's account to yours, and at some lenders bank statements from the giver evidencing the funds existed beforehand. Assemble this at the same time as the letter rather than in the week the application is due.

Gift letters and genuine savings

A signed gift letter answers the question 'is this a loan'. It does not answer the separate question of genuine savings, which some lenders apply at low deposit levels and which looks for money accumulated over time. A gift that landed last week may satisfy the first test and not the second. Where that applies, the options are a holding period, a lender whose policy accepts the gift as it stands, or rent history as a substitute.

Who should sign

Everyone whose money it is. Where the funds come from a joint account, both account holders sign. Where parents are gifting from a shared position, both sign. A letter signed by one person for money belonging to two is the kind of small inconsistency that generates a request for clarification and costs a week.

Family helping with your deposit?

Charles can tell you what your specific lender will want to see, and whether genuine savings rules also apply to your file.

Talk it through

Gift letter questions

Does a gift letter need to be witnessed or signed by a solicitor?

Usually not for an ordinary gift letter, though some lenders require the form to be witnessed and a few ask for a statutory declaration. Requirements differ, so it is worth confirming before arranging signatures. Where the sum is large, the people giving the gift may want their own legal advice regardless of what the lender requires.

Can my parents lend me the deposit instead?

They can, but it changes the assessment considerably. A loan is a liability, so the repayments count against your borrowing capacity and the lender will want the terms. Many borrowers who intend a loan are better served by a family guarantee, which uses the parents' equity without money changing hands.

Will the lender contact my parents?

Sometimes, to verify the letter is genuine, which is a normal verification step rather than a sign of suspicion. It is worth telling whoever signs that they may receive a call, so it is not a surprise.

Does a gift count as genuine savings?

Not automatically. Genuine savings rules, where they apply, look for funds accumulated over time rather than a recent lump sum. Money held for a period commonly converts to seasoned funds, and some lenders accept rental history instead. It is a separate question from whether the gift itself is acceptable.

Can the gift come from overseas?

Yes, with the same letter plus provenance: evidence of the source and a documented transfer trail. Allow extra time, because international transfers take longer to clear and some lenders require a seasoning period once the funds land.

Get the paperwork right before it is urgent.

Twenty minutes with Charles: what your lender will require, and how the gift fits with any savings rules that apply. Free, no credit check.

Book a Time or call 0423 952 184

Prefer a callback?

Charles calls back within one business day.